KARACHI: The Securities and Exchange Commission of Pakistan (SECP) allowed conventional insurance companies to offer takaful - the shariah-compliant version of insurance - products with the launch of Takaful Rules, 2012 on Friday.
Representatives of unconventional Takaful companies, however, boycotted the launch ceremony of the new rules in protest against the permission granted to conventional companies.
Muhammad Ali, chairman of SECP, expressed regret at their boycott, saying that SECP had devised the new rules after consultation with all stakeholders. “I am sad to know that representatives of takaful companies are not attending the ceremony; competition is the way forward and takaful companies should realise this,” he said.
The SECP launched the new rules in response to insurance industry’s demand to allow them to offer takaful products through their dedicated shariah-compliant windows. The move is expected to provide the impetus for the growth of takaful products in Pakistan. According to Muhammad Asif Arif, commissioner insurance, Pakistan is the second country in the world, after Indonesia, to allow takaful operations to conventional insurance companies. Takaful is a scheme based on the principle of mutual assistance in compliance with the provisions of Islamic shariah.
It provides for a common fund to be set up by participants who provide each other with financial assistance in certain contingencies.